NFIB Weekly News
NFIB Weekly News
Leading the News
Small Business Optimism Declines In January, Below Historical Average (02/09/2021)
The NFIB Small Business Optimism Index (2/8) declined to 95.0 in January, three points below the 47-year average of 98 and a decrease of 0.9 from December. The number of small business owners expecting improved business conditions over the next six months declined by seven points to a net negative 23%, the lowest level since November 2013, while the net percent of owners expecting better business conditions has fallen by 55 points in the last four months. NFIB Chief Economist Bill Dunkelberg was quoted saying, “As Congress debates another stimulus package, small employers welcome any additional relief that will provide a powerful fiscal boost as their expectations for the future are uncertain. ... The COVID-19 pandemic continues to dictate how small businesses operate and owners are worried about future business conditions and sales.”
Bullish Investor Sentiment Contrasts With Mixed Economic Forecasts. Courthouse News (2/5) reported on the contrast between bullish investor sentiment in recent days and the more mixed economic picture presented by jobs reports and the NFIB survey for January. NFIB executive director of research Holly Wade was quoted saying, “The reopening of the Paycheck Protection Program is likely a main factor in the decrease of those anticipating having to close their doors soon but still, the economic recovery remains uneven for small businesses.”
Federal Officials Hoping To Learn From Prior PPP Missteps, NFIB’s Wade Quoted (01/26/2021)
Yahoo! Finance (1/25) reported, “With the latest, $285-billion round of Paycheck Protection Program funding...federal officials are aiming to avoid the worst missteps of the previous versions.” Yahoo Finance said, “The process was excruciating for small businesses, said Holly Wade, executive director of the National Federation of Independent Business Research Center.” Wade was quoted saying, “The uncertainty of how they were going to navigate through this was incredibly emotional for many small-business owners. ... When they were applying, it was incredibly difficult for many of them to get a hold of their bank to better understand how they were supposed to fill out these applications, how to qualify for the maximum amount that they were eligible for.”
NFIB, Others Advise Against Hiking Federal Minimum Wage (01/26/2021)
CNBC (1/25, Rogers) reported, “While small business owners are cheering President Joe Biden’s plans to direct more aid to a Main Street that has been ravaged by the pandemic,” they warned that another Biden pledge--a $15 an hour minimum wage--could further stall the economic recovery from the pandemic. NFIB vice president of federal government relations Kevin Kuhlman was quoted saying, “We are concerned that elements of this plan would hurt the businesses that have borne the lion’s share of the pain from the pandemic. ... Big business may be fine with a dramatic increase of the federal minimum wage and paid leave mandates as they’ve been thriving during the pandemic, but small businesses know these policies will make it even harder for them to compete against their larger competitors.”
Small Business Optimism Dropped Sharply In December (01/12/2021)
NFIB’s Small Business Optimism Index declined to 95.9 in December, a 5.5 point drop that puts the Index below 98, its average value since 1973. Small business job growth stayed steady but uneven in December, as certain sectors are experiencing a slowdown due to state-mandated business closures and reluctant consumer spending. NFIB Chief Economist Bill Dunkelberg was quoted saying, “This month’s drop in small business optimism is historically very large and most of the decline was due to the outlook of sales and business conditions in 2021. ... Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation.”
Small Businesses Prepare For Additional Round Of Federal Relief Loans (01/05/2021)
Bloomberg Tax (1/4) reported small businesses are preparing for another round of applications for federal relief loans. Bloomberg said, “Nearly half of small businesses would apply for a second PPP loan if eligible, and 22% of borrowers have or expect to have to lay off staff in the next six months, according to an early December survey of nearly 600 members of the National Federation of Independent Business.”
Economists Optimistic About Economic Growth, Job Creation In 2021 (01/05/2021)
The Wall Street Journal (1/3, Torry, Subscription Publication) reported economists it surveyed expect the Labor Department’s jobs report will show that employers added 68,000 new jobs in December, marking a decline from 245,000 a month earlier and the slowest month of the labor market recovery since May. However, economists also saw a number of reasons to be optimistic about the economy as the year moves forward. Economists cut their forecasts for economic growth and job creation in the first quarter of this year, but increased them for the second, third and fourth quarters.
Business Climate
House Small Business Committee Held Hearing On State Of Small Business Economy (02/09/2021)
Credit Union Insight (2/6) reported, “The House Small Business Committee Thursday held a hearing to discuss the state of the small business economy amid the coronavirus pandemic.” During the hearing, “several witnesses discussed how the committee can be helpful to small businesses, specifically regarding improving the Small Business Administration’s (SBA) paycheck protection program (PPP) and economic injury disaster loan (EIDL) program.” In addition, the hearing also “discussed the role of community development financial institutions (CDFIs) helping small businesses in their communities.”
Small Business Surveys Show More Aid Needed (02/09/2021)
In a piece for Forbes (2/4), Dane Stangler wrote about the state of small businesses and entrepreneurship nearly a year into the pandemic. Citing various surveys, Stangler notes the NFIB’s December study found “one-fifth of small businesses say they expect to lay off employees in the next six months – even after exhausting their PPP loan.” In addition, 46% of small businesses that received PPP funds still “took action to reduce employment.”
Survey: 53% Of Small Businesses Don’t Expect Revival For Six Months (02/09/2021)
CNBC (2/2, El-Bawab) reported the Census Bureau’s Small Business Pulse Survey showed 53% of small business owners aren’t expecting business to return to pre-COVID levels for at least six months. A little over 25% of small businesses are operating at normal levels.
Some Business Leaders Fear Return To Normal Not Likely In 2021. The Wall Street Journal (2/7, Krouse, Subscription Publication) reported new variants of COVID, along with the slow vaccine rollout, have eliminated some business leaders’ hopes for a return to normal this year
IHS Markit: US Economy Seeing Increased Activity This Month (01/26/2021)
The Wall Street Journal (1/22, Hannon, Subscription Publication) reported IHS Markit on Friday revealed its index of US manufacturing activity for January “increased to 59.1, the highest level in more than a decade, while a measure of service-sector activity reached 57.5,” which suggests the economy is growing.
AP Analysis: Despite Damaged Economy, There Are Signs Of Recovery (01/26/2021)
In an analysis, the AP (1/21, Rugaber) reported although President Biden “has inherited a badly damaged economy,” there are “signs of resilience and recovery that suggest the prospect of a rebound...by the second half of his first year in office.” The AP said “much of the economy” has held up surprisingly well compared with previous recessions. Nonetheless, “many signs are dreary,” which “helps explains why Biden saw the need last week to propose another mammoth federal rescue aid package.”
Shift In Spending During Pandemic Disrupted Global Supply Chain (01/26/2021)
The Washington Post (1/24, Lynch) reported that a year after “the coronavirus pandemic first disrupted global supply chains by closing Chinese factories, fresh shipping headaches are delaying US farm exports, crimping domestic manufacturing and threatening higher prices for American consumers.” According to the Freightos Baltic Index, “the cost of shipping a container of goods has risen by 80 percent since early November and has nearly tripled over the past year.” The increase “reflects dramatic shifts in consumption during the pandemic, as consumers redirect money they once spent at restaurants or movie theaters to the purchase of record amounts of imported clothing, computers, furniture and other goods.” The “unprecedented spending shift has upended long-standing trade patterns, causing bottlenecks from the gates of Chinese factories to the doorsteps of US homes.”
Small Business Marketing
Small Businesses Adapt To Pandemic Consumption Patterns By Turning To Amazon, Etsy To Sell Their Wares (02/09/2021)
In his column for USA Today (2/8, Febius), Mike Febius wrote that although the growth of e-commerce has threatened some smaller, more traditional businesses, it has also provided “a lifeline” to others during the pandemic, helping them to stay afloat during the ongoing recession by allowing them to sell their wares on marketplaces like Amazon and Etsy. In fact, according to Febius, “the line between in-store and online is blurring, driven in part by pivot-or-perish stories,” with many entrepreneurs who own small brick-and-mortar businesses “helping to write the playbook for mom-and-pop success in the post-pandemic era.”
Arminio: Small Business Debt Crisis Spurs Fintech Innovation (02/09/2021)
Writing at Payments Source (2/3), Avenue B Consulting President and CEO Maria Arminio said that with US small businesses increasingly relying on PPP loans to bridge the pandemic’s consumer spending gap, there are “many outstanding questions about the loans being made and the payback periods.” However, the good news “is that fintech companies bring great innovation to these traditional services in the form of new risk models, intelligent data-gathering using APIs, and streamlined processing using AI and machine learning.”
Visa Doubles Down On Digital Enablement For SMBs (02/09/2021)
PYMNTS (2/5) reported that on February 7, “Visa’s Authorize.net will partially waive its transactional fees and completely waive its monthly gateway account fees to reduce the costs for smaller businesses based in North America that want to accept digital payments.” Visa has “said those costs can approach $10,000 for smaller firms.”
Amazon’s Small Business Empowerment Head Addresses Competition Fears (01/26/2021)
Forbes (1/23) contributor John Greathouse interviewed Amazon Head of Small Business Empowerment Keri Cusick about how the company supports its smaller sellers. In response to fears that Amazon competes with its own sellers, Cusick said, “Sales from our SMB selling partners account for more than half of everything sold in our store. The products they sell are very important to us and to customers. We have no interest in limiting the performance of our selling partners in any way, and we strictly prohibit Amazon employees from using non-public, seller-specific data to determine which private label products to launch.”
Visa: 82% Of Small Businesses Shift Toward Digital Payments (01/26/2021)
The Paypers (NLD) (1/19) reported a new study by Visa “revealed 82% of small business owners are shifting toward digital payments in response to the pandemic.” According to the Visa Back to Business Study, “small businesses are rolling out new forms of in-store contactless payments. The 82% increase of small businesses using contactless payment is up from the mere 20% in June 2020.”
Media Consumption Increases Amid Pandemic (01/26/2021)
Ad Age (1/20, Juang) reported behind a paywall that a PQ Media survey indicates that consumers working from home have been “more plugged in than ever.” Media that “benefited the most in 2020 were already seeing gains in previous years, says PQ Media, noting the coronavirus accelerated existing trends.” Big winners included social media, audio, video games, and streaming. PQ Media noted that while younger generations “consume less overall media compared to older generations, younger generations use digital devices for the hours they do consume.”
Wages and Benefits
New Unemployment Claims Fell To 779K Last Week (02/09/2021)
The AP (2/4, Rugaber) reported new claims for unemployment benefits “declined to 779,000 last week, a still-historically high total that shows that a sizable number of people keep losing jobs to the viral pandemic.” While the total “declined from 812,000 the previous week,” the AP said the number “reflects a U.S. job market that is still suffering from the pandemic, with hiring having weakened for six straight months.” The New York Times (2/4, Phillips) said economists contend “the latest data strengthens the argument for more stimulus.”
Bloomberg (2/4, Rockeman) said claims “fell last week to the lowest level since the end of November, a sign that job cuts are starting to slow as Covid-19 infections ebb.” According to Bloomberg while the number is and indication “that layoffs related to the pandemic are starting to ebb after jobless claims picked up in December and early January. In the coming months, as more Americans get inoculated and virus cases fall, economic activity is poised to resume and job cuts may decline further.”
Business Groups Push Back On $15 Minimum Wage Initiative (02/09/2021)
Politico (2/5, Oprysko) reports, “A coalition of business groups are pushing back against congressional Democrats’ push to raise the minimum wage to $15.” The National Federation of Independent Business was among the more than 30 groups that “wrote to the top lawmakers on the House and Senate labor committees on Thursday, warning that raising the minimum wage now would only compound the economic pain businesses are facing because of the pandemic, resulting in either a reduced workforce or increased prices for consumers.”
Roll Call (2/8, Zeller) reported on the debate over raising the minimum wage to $15 per hour, noting “12 House Democrats are on the record preferring to allow regional differences based on the cost of living. The group, led by Alabama’s Terri A. Sewell, sponsored 2019 legislation to implement their proposal.” Roll Call added the “economics of raising the wage, of course, are hotly contested. Detractors say it would cost jobs in low cost-of-living, rural areas, and leading employer groups like the Business Roundtable prefer Sewell’s idea. But the large companies that are among its members can weather wage increases.” NFIB Vice President of Federal Government Relations Kevin Kuhlman was quoted saying, “Companies listed on Wall Street may support a much higher minimum wage because it would give them a competitive advantage, but a hike would make it that much harder for Main Street to even continue to exist.”
Pandemic-Era Unemployment Insurance Woes Puts Workers, Businesses In Difficult Position (02/09/2021)
The Washington Post (2/8, Rosenberg) reported on unemployment insurance during the pandemic, as both workers and businesses were put in a difficult position by fears of infection and overwhelmed state aid systems. NFIB Vice President of Federal Government Relations Kevin Kuhlman was quoted saying, “They had either had employees decline the job offer or had to offer higher salaries for employees to return. ... Our overall concern is just, you know, inserting more friction between the small-business owners and small-business employees.”
New Unemployment Claims Fell To 900K Last Week (01/26/2021)
The AP (1/21, Rugaber) reported that on Thursday, the Labor Department revealed that “the number of Americans seeking unemployment benefits fell slightly last week to 900,000, still a historically high level that points to ongoing job cuts in a raging pandemic.” The AP said the economy “faltered this winter as virus cases spiked, cold weather restricted dining and federal rescue aid expired.” The AP added that “the government said 5.1 million Americans are continuing to receive state jobless benefits, down from 5.2 million in the previous week,” which “suggests that while some of the unemployed are finding jobs, others are likely using up their state benefits and transitioning to separate extended-benefit programs.” CNBC (1/21, Cox) reported on its website that “the latest claims report showed that the total of Americans receiving unemployment benefits continues to decline, though largely due to a drop in pandemic-related programs as 2020 came to a close. There were just under 16 million benefit recipients in the most recent data, down from 18.4 million.”
The New York Times (1/21, Schwartz) said the Administration “pointed to the latest data to make its case for new spending.” NEC Director Deese said, “[Thursday] morning’s report on new unemployment claims is another stark reminder that we must act now.” Deese added that the situation “will only worsen if bold action isn’t taken.”
Biden Likely Needs GOP Support To Pass Proposed Minimum Wage Hike (01/26/2021)
Biden Likely Needs GOP Support To Pass Proposed Minimum Wage Hike
CNBC (1/20, Reinicke) reported on its website that last week, President Biden “call[ed] on Congress to raise the federal minimum wage to $15 per hour from the current $7.25” where it has been since 2009. While such an increase is “popular among some lawmakers, activists and consumers, it still faces a lot of opposition to becoming law,” and “even though Democrats now have a slim majority in both the House and the Senate, it’s not a given that Congress will be able to pass it as proposed.” Sarah Binder, a political scientist at George Washington University and the Brookings Institution, said, “There’s an outside chance you could do it through reconciliation, but I think what I take away from this is, in fact, you need a super majority and Republican support to get this done.”
Unemployment Claims Slipped To 787K Last Week (01/12/2021)
The AP (1/7, Rugaber) reported the Labor Department said Thursday that initial claims for unemployment aid “fell slightly to 787,000” last week, “evidence of a job market stumbling in the face of the viral pandemic and the damage it has inflicted on the economy for nearly 10 months.” The New York Times (1/7, Cohen) said the fact that new claims for benefits “remained high last week” is “the latest evidence that the pandemic-racked economy still has a lot of lost ground to make up in the new year.”